ALBURO ALBURO AND ASSOCIATES LAW OFFICES ALBURO ALBURO AND ASSOCIATES LAW OFFICES

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MON-SAT 8:30AM-5:30PM

June 1, 2022

ON VALUATION OF RESERVE LIABILITIES OF THE PRE-NEED COMPANY

After reading On Valuation of Reserve Liabilities of the Pre-Need Company, read also On Investment of the Trust Fund under the Pre-Need Code of the Philippines

  • An annual pre-need reserve valuation report by the pre-need company shall be submitted to the Insurance Commission

  • Any deficiency in the fund shall be covered by the pre-need company

  • In case of an excess of the fund over the reserve liability, the excess shall be credited for future deposit requirements

To determine the sufficiency and adequacy of the fund, an annual pre-need reserve valuation report establishing the reserve requirement and contractual liabilities of the pre-need company shall be made and submitted to the Insurance Commission (Commission).

When should the pre-need reserve valuation report be submitted to the Commission?

The law says:

The pre-need reserve valuation report shall be made and submitted to the Commission within one hundred twenty (120) days from end of the calendar year. The valuation report shall contain the assumptions, methodology, formulas used, a summary of the pre-need plans that were subject of valuation and the results of such valuation. 

The report shall be duly certified to by a professional as may be determined by the Commission. Upon approval by the Commission of the reserve computation, any deficiency in the fund shall be covered by the pre-need company, in the manner as may be prescribed by the Commission. In case of an excess of the fund over the reserve liability, the excess shall be credited for future deposit requirements. 

What happens after the approval by the Commission of the pre-need reserve computation?

The law says:

Upon approval by the Commission of the pre-need reserve computation submitted to it by the pre-need company, any deficiency in the trust fund, when compared to the reserve liabilities as reported in the pre-need reserve valuation report, shall be funded by the pre-need company within sixty (60) days from such approval. 

Failure to cover the deficiency in an appropriate manner within the time required shall subject the pre-need company to the payment of a penalty, in addition to other remedies exercisable by the Commission, as provided for in the Pre-need Code of the Philippines. Any excess of the trust fund over the actuarial reserve liabilities may be credited to future deposit requirements.


Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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